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United Lawsuit: Claims of Manipulated Redemption Rates

by on November 13, 2013 · 16 comments

in United

Two New Jersey residents, Robert Gordon and Melissa Chan, jointly filed a lawsuit against United  recently for breach of good faith and fair dealing with claims that the airline manipulated its mileage redemption rates in order to force MileagePlus members with more miles to redeem more of them for certain rewards, in this case hotel stays (flight redemptions are published and fixed).

The way this came about is that Gordon and Chan were trying to book a room at the same hotel for the same dates using their United miles. Chan had 41,773 miles in her account – several thousand more than Gordon – and United’s reservations system quoted her a mileage redemption rate of 3,750 more miles than Gordon was quoted for the same service.

Gordon claims he called United to find out why and was told that United uses an algorithm that adjusts the number of miles needed for a reward booking depending on the number of miles in a customer’s MileagePlus account. While it’s well known that airlines actually give elite flyers preferential rates on cars and hotels booked with miles, in this case it looks like it adjusts the mileage redemption as a proportion of the miles in a member’s account.

However, even though Chan had more miles in her account, I suspect that Gordon might have elite status and might have gotten the preferential rate and the pair does not realize this (though discounts are usually more than 3,750 miles).

For example, I checked out hotels in Phoenix using United’s hotel and car booking page and found a couple for as low as 15,000 miles a night without logging in.

Screen shot 2013-10-10 at 11.11.28 AMHowever, when I logged into my MileagePlus account as a Premier Platinum elite, I found that the rates had dropped to 10,600 miles – 4,400 miles less and well within the range that Chan and Gordon noted.

Screen shot 2013-10-10 at 11.26.18 AMSo though the lawsuit does not say whether Gordon has elite status or not, what I think might have happened is that he has elite status (even low-tier elites like Premier Silvers get a discount on mileage redemptions for hotels and cars) and that he was given a lower redemption rate when he was logged in and that the pair mistakenly attributed it to Chan’s having more miles in her account and thus being charged a higher figure. Sounds like their lawyer should have done his or her homework!

As I said, it’s not clear yet whether elite status played a part in this, but if it did, this lawsuit like many others against frequent flyer programs will likely go nowhere fast.

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  • Jason Yip

    Should be 4400 less..10600 + 4400 = 15000

  • kathy

    You should be happy that someone is taking a stand against the increases and devaluations. When will you do it?

  • jackdaniels2

    go back to work Kathy..I see you.

  • http://thehustleblog.com/ The #hustle Blog

    What a waste of time and resources

  • railingk

    These two are suing over, what, 40 bucks? Is there an angle here or are they just the least busy people in the world?

  • steve

    lawsuits like this drive up prices for all of us

  • Guest

    For me this brings up a related issue – I noticed that on miles earnings there is a difference. I did some shopping through United’s shopping site and earned 4 miles per dollar on Harry & David Orders. I then used my husband’s account to place an order and saw he only gets 3 miles per dollar at the same merchant. That makes no sense….and I never realized before they might give different people different rates. Have you seen that?

  • Toni Southam

    Do you have the mileage plus credit card through Chase? I have it and my husband does not, therefore, I get higher points offers in the mileage plus shopping portal than he does. This happens often.

  • scwam

    United is certainly manipulating the infant taxes on rewards. Just take a few days and screen print the inconsistencies you will find on the tax for an award seat on a baby under 2. It’s all over the place, and in one instance I got a tax of nearly 1 million $. It took me over a month to get a proper (reasonable tax) and I was quoted incorrectly 3 different taxes on the same day by phone, same flights, until I got quoted the lowest tax available. I took that one which was half of the lowest I could find on the website.

    Redemption rewards will even charge you more miles for selecting an partial Economy leg versus a Business leg on a multi-leg business class fare. You need to watch United closely or they will trick you. They should be sued.

  • cthej

    It’s actually not a devaluation, it’s a perk.

  • mulbry

    I am very interested in how this turns out. I had the exact same situation booking a hotel in Kauai with airline miles. My wife was quoted a price 5,000 miles more per night for the exact same place. we both had the explorer card and neither of us have any status. When i called in about the difference the agent said that United will offer better deals to certain clients. Huh? I didnt feel lucky to get the lower rate, I felt ripped off that my wife had to pay the higher rate. Its a lousy system and United should get called out for price gouging.

  • YourAnon

    This is a class action lawsuit. We’re talking about millions of dollars.

  • Lynn

    I see that a lot. I shop through United portal using 3 different accounts, mine, my husband and my mother. Whenever I log in as my mother, a silver elite, the United Explorer card ad always says get 50,000 bonus miles to sign up. If I log in as the other two accounts, then I get the standard offer of 30,000 miles to sign up. If I log in as my husband, a MileagePlus card holder, then some merchants, not all, offer more miles per dollar than when I log in as the other two accounts.

  • Smarter than You

    It’s not class action. It’s just two parties who joined together in a lawsuit. Class action is something entirely different and needs court approval.

  • YourAnon

    Wrong statement and logic. This is a class action lawsuit that is yet to be certified. Every class action needs court approval, including this one.

  • YourAnon

    Nah. Fees paid for professional services such legal services qualify for tax deductions.

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